How Does a Home Loan Work in Singapore: Homejourney Guide
This definitive Homejourney guide explains how a home loan works in Singapore, covering mortgage basics from eligibility to repayment. Whether you're a first-time buyer or refinancing, understand housing loan Singapore rules, processes, and tips to make confident decisions in a safe, trusted environment.
Homejourney prioritizes your safety with verified bank rates, instant eligibility calculators, and Singpass-enabled applications. Start by exploring current rates from DBS, OCBC, UOB, and more to see your options today.
Table of Contents
- Executive Summary
- 1. Home Loan Explained: Mortgage Basics
- 2. Home Loan Eligibility in Singapore
- 3. HDB Loans vs Bank Loans
- 4. LTV, TDSR, and MSR Limits
- 5. Interest Rates and SORA Explained
- 6. The Complete Home Loan Process
- 7. Using CPF for Your Home Loan
- 8. Hidden Costs and Stamp Duties
- 9. Refinancing Your Home Loan
- 10. Calculators, Tools, and Pro Tips
- FAQ: Common Home Loan Questions
- Next Steps with Homejourney
Executive Summary
A home loan in Singapore finances up to 75-90% of your property value, with repayments spread over 20-30 years using cash or CPF. Key regulators like MAS enforce LTV limits, TDSR (capping debt at 55% of income), and MSR for HDB (30% of income). Bank loans often offer lower rates via SORA, while HDB provides stability but higher rates[7].
This guide breaks down how mortgage works in Singapore, with real examples, calculations, and Homejourney tools for safe decisions. For first-timers, expect 25% downpayment on private properties; upgraders can leverage CPF grants. Use Homejourney's mortgage calculator to test scenarios instantly.
1. Home Loan Explained: Mortgage Basics
A housing loan Singapore is a secured loan where the property acts as collateral. You borrow from banks like DBS, OCBC, UOB, HSBC, or HDB, repaying principal plus interest monthly. Fixed-rate loans lock payments for 2-5 years; variable rates follow SORA benchmarks[2].
Key terms:
- Principal: Amount borrowed.
- Interest: Bank's cost for lending, ~3-4% p.a. in 2026.
- Tenure: 20-30 years max (age 65 cap).
- Amortization: Early payments mostly interest; later, principal.
For a S$1M condo at 75% LTV (S$750K loan, 25-year tenure, 3.5% rate), monthly payment is ~S$3,800. Homejourney's tools simplify this—compare rates at our bank rates page[1][2].
Real Example: First-Time Buyer
Ah Meng, 30, earns S$6,000/month. For S$800K HDB, MSR allows ~S$1.8M loan, but TDSR limits to income/debt ratio. He borrows S$720K (90% LTV), pays S$3,200/month using CPF + cash.
2. Home Loan Eligibility in Singapore
Minimum age: 21; max tenure to age 65. Salaried need 3 months' payslips; self-employed, 2 years' tax returns[3]. Foreigners face 75% LTV cap, 60% ABSD[1][2].
Banks assess:
- Stable income (S$3,000+ monthly).
- Credit score via Credit Bureau Singapore.
- No bankruptcy.
Insider tip: Permanent residents get better rates. Use Homejourney's Singpass integration for instant pre-fill and eligibility check[6].
3. HDB Loans vs Bank Loans
| Feature | HDB Loan | Bank Loan |
|---|---|---|
| Rate (2026) | 2.6% p.a. fixed | 3M SORA + 0.5-1% (~3.2%) |
| LTV Max | 90% (first-timer) | 75-90% |
| Eligibility | HDB flats only | All properties |
| Processing | Slower, queue | Faster, competitive |
HDB suits stability; banks offer lower rates, flexibility[7]. Switch anytime with 1-2% penalty. Homejourney compares both—apply multi-bank via one form.
4. LTV, TDSR, and MSR Limits
Loan-to-Value (LTV): Max borrow % of property value/lower valuation. First property: 75% (≤30yrs); 55% (>30yrs)[1][7].
Total Debt Servicing Ratio (TDSR): Total debt ≤55% gross income. Stress-tested at +3% rate[1].
Monthly Servicing Ratio (MSR): HDB-only, ≤30% income.
Example: S$10K income, S$2K debts → TDSR room S$3.5K/month at stress rate.
5. Interest Rates and SORA Explained
SORA (Singapore Overnight Rate Average) replaced SOR/SIBOR. 3M SORA ~3% in 2026; banks add 0.5-1.5% margin[2]. Fixed rates offer 2-3yr certainty.
The chart below shows recent interest rate trends in Singapore:
Rates rose 0.5% last 6 months, per trends. Track live on Homejourney. Fixed suits rising rates; SORA for falls[2].
Pro tip: Lock-in before hikes. Compare DBS (SORA+0.7%), OCBC (fixed 3.2%) on Homejourney.
6. The Complete Home Loan Process
- In-Principle Approval (IPA): Submit docs online (3-5 days). Valid 30-60 days[1][2].
- OTP Exercise: Pay 1-5% deposit post-IPA.
- Valuation & LO: Bank values property; issue Letter of Offer.
- Legal Completion: 8-12 weeks; disburse funds[1].
Homejourney streamlines: Singpass auto-fills payslips, CPF. Apply to DBS, UOB, HSBC simultaneously[3][5][6].
Documents needed:
- NRIC/Passport.
- 3-6 months payslips.
- IRAS NOA (2yrs).
- CPF statements[3].
7. Using CPF for Your Home Loan
CPF Ordinary Account (OA) funds downpayment/repayments up to available balance + accrued interest. First property: Use up to 100% OA. Accruing interest: Govt pays 2.5%+ on used CPF.
Limit: Cannot overdraw OA. For S$3K payment, if OA S$2K, pay S$1K cash. Homejourney's calculator shows CPF impact instantly.
Grants: Proximity Housing Grant (S$20K+), EHG up to S$120K for families[2].
8. Hidden Costs and Stamp Duties
BSD: 1-4% purchase price. ABSD: 20% second property (PR), 60% foreigners[1]. Fees: Valuation S$500-2K, legal S$2-3K.
Total for S$1M condo: ~S$50K extras. Factor into budget via Homejourney tools.
9. Refinancing Your Home Loan
Refinance 2-3 months pre-lock-in expiry. Save 0.5% rate = S$10K+ over tenure. Process: New IPA, redeem old loan (2-month notice)[4].
Homejourney simplifies: Compare rates, multi-bank apps. See refi options. Check Home Loan Tenure Benefits for details.
10. Calculators, Tools, and Pro Tips
Actionable Tips:
- Apply IPA early—strengthens offers.
- Time for low SORA (track via Homejourney).
- Maximize CPF to reduce cash outlay.
- Shop 3+ banks; use Homejourney for all-in-one.
Disclaimer: This is general info; consult advisors. Rates fluctuate[7].
Find properties in budget: Homejourney search.
FAQ: Common Home Loan Questions
How does mortgage work Singapore for first-timers?
First-timers get 90% LTV on HDB (≤1M value), CPF grants. IPA first, then OTP[7].
Home loan process timeline?
IPA: 3 days; full: 8-12 weeks[1].
SORA vs fixed?
SORA variable, cheaper long-term; fixed for stability[2].
Can foreigners get home loans?
Yes, 75% LTV, but 60% ABSD[1].
Refinance costs?
1-2% penalty + legal fees ~S$5K[4].
TDSR calculation example?
S$8K income, S$1K car loan: Max housing S$3K at stress rate.
Best banks 2026?
Compare DBS, OCBC, UOB on Homejourney—lowest SORA margins.
More FAQs: Home Loan Tenure FAQs.
Next Steps with Homejourney
Secure your future: Compare rates, calculate eligibility, apply via Singpass. Homejourney verifies data, connects to DBS-UOB partners, ensures transparency. Your safe path to homeownership starts here.
Post-purchase: Aircon services for maintenance. Explore projects at projects directory.
References
- Singapore Property Market Analysis 7 (2026)
- Singapore Property Market Analysis 2 (2026)
- Singapore Property Market Analysis 1 (2026)
- Singapore Property Market Analysis 3 (2026)
- Singapore Property Market Analysis 6 (2026)
- Singapore Property Market Analysis 5 (2026)
- Singapore Property Market Analysis 4 (2026)
